Retail Technology
| Log in | Subscribe



Subscribe | Log in
Retail Technology
Subscribe

Balance tips in favour of mobile and cloud

By Retail Technology | Monday February 18 2013

Internet-enabled technology disruption will continue to influence the retail IT landscape during the coming year, as online and mobile channels continue to cannibalise High Street sales, writes Retail Technology editor, Miya Knights

E-commerce will be the biggest IT investment priority for UK retailers for the next three years, according to findings from the annual national survey conducted by UK-based analyst firm Martec International.

Canvassing opinion from senior IT executives in the UK’s leading 150 retailers, representing 71% of UK sales combined, the ‘IT in Retail 2013’ report forecasts a year of continued challenges ahead, as overall spending falls across the sector, countered by opportunities around e-commerce, mobile and customer-centric technologies.

The retail good and bad news 

Brian Hume, managing director of Martec international, gave his insight into retailers’ dilemma, characterising the survey as containing both good and bad news for the year ahead. “Year-on-year, online sales in 2012 grew 16% while industry-wide sales only grew 1.5% overall,” he said. “That growth online is a cannibalisation of traditional High Street stores.” 

Even though the research found IT spend represented 0.9% of sales in in 2012, compared to 1% in 2011, Hume pointed out that IT spend had made up on average 1.3% of sales for a period of four years prior. He suggested the drop over the last two years seemed bigger at first glance because retail sales have not kept pace with inflation. 

He added that some retailers were sweating the investment lifecycle of technology hardware, like electronic point-of-sale (EPoS) and handheld mobile systems instore at the expense of investment in online, supply chain and customer systems.

“Some retailers are stretching out their device lifecycles to run with a reduced IT budget and fund e-commerce and m-commerce projects,” he said. “It’s a bit like ‘Y2K,’ where retailers waited until afterwards to upgrade systems. This time I suspect retailers might get lucky in developing new mobile and e-commerce apps that mean they don’t have to upgrade store software when they do buy the latest hardware to support omnichannel capabilities.”

Deferring store IT hardware upgrades

Store systems traditionally consumed as much as 80% of the IT budget, as a result of large store estates. But reduced budgets and the rapid acceleration in online and mobile sales, means that focus has had to change in recent years. “There’s also the whole ‘bring your own device’ trend, where retailers may also be deferring EPoS hardware replacements and using iPads as the cash register instead to bring costs right down,” Hume added.

Nearly a quarter (23%) of retailers also said they allocated spending on e-commerce systems outside the IT budget. But perhaps surprisingly, the same percentage did not have a transactional website. Of those that did, online sales represented 7.3% of total sales, which was an increase from 6.3 percent the previous year. And the majority (43%) stated they were achieving more than 10% of their sales from non-store transactions. 

Almost half (49%) of retailers stated they were already using m-commerce technologies and a further 13% said they were planning to do so as sales via mobile now average 2.9% of sales overall. Lee Gill, regional vice president of retail strategy at supply chain and merchandising management company JDA Software, which sponsored the research, said this further proof that retailers were responding to unprecedented, technology-driven change.

Top UK retail IT priorities

Where e-commerce and store systems were retailers’ top two biggest investment priorities, supply chain and systems integration emerged joint third, followed by customer relationship management (CRM) systems.

“Retailers have done their cost cutting and made efficiency gains, next is a razor-sharp focus on the consumer,” Gill said. “They need to offer consumers a truly seamless journey regardless of what channels they use to shop and transact.”

This story first ran as the introduction to the 'Horizons' feature of the March/April 2013 issue of Retail Technology magazine. Click here to subscribe to the print edition or register for the free e-version. 

Related items

Mobile and cloud demand new lines of defence

By Retail Technology | Retail Technology

Multichannel: The e-commerce conundrum

By Retail Technology | Retail Technology

Workforce management moves with the times

By Retail Technology | Retail Technology

Back office IT supports retail success

By Retail Technology | Retail Technology

Kiddicare expands clicks to bricks

By Retail Technology | Retail Technology

The real cost of money in retail

By Retail Technology | Retail Technology

Retailers revolutionise IT in their stores

By Retail Technology | Retail Technology

Carrying the torch for UK retail

By Retail Technology | Retail Technology

Retailers embrace mobile technology

By Retail Technology | Retail Technology

Retailers urged to optimise back office IT

By Retail Technology | Retail Technology